Watkins
filed its initial complaint in the District of Minnesota on
June 9, 2015. After several consumer class actions against
McCormick followed-each alleging deception by the same
“slack-filled” pepper containers-the Judicial
Panel on Multi-District Litigation consolidated all of the
“slack-fill” lawsuits against McCormick and
transferred them to this Court on December 8, 2015. Once
plaintiff was before this Court, it filed an amended
complaint on March 2, 2016, referencing the allegations in
the parallel consumer actions. (See Am. Compl.
¶¶ 50-55.) After the parties had begun briefing the
present motion to dismiss, plaintiff filed a second amended
complaint on July 10, 2016. (See Second Am. Compl.,
ECF No. 57.)

The
consumer class actions and this lawsuit all rely upon the
allegation that consumers were deceived by McCormick's
pepper packaging and believed they were buying more pepper
than they ended up receiving. (See Am. Compl.
¶¶ 52-55.) Watkins claims that the fraudulently
induced choices of these duped consumers inflated
McCormick's sales to the detriment of Watkins' sales.

Defendant
filed its motion to dismiss on March 30, 2016, arguing that:
(1) plaintiff enjoys neither constitutional standing under
Article III nor statutory standing under the Lanham Act; (2)
plaintiff fails to state a claim under either the Lanham Act,
the state statutes, or common law; and (3) Minnesota
choice-of-law rules[1] preclude plaintiff's claims under
the California and Florida statutes; and (4) unfair
competition is not an independently existing tort under
Minnesota law. (See Def.'s Mem. Supp. Mot.
Dismiss (“Def.'s Mem.”) at 5-7.) Plaintiff
filed its opposition on April 27, 2016. (See
Pl.'s Mem. Opp. Def.'s Mot. Dismiss, ECF No. 42
(“Pl.'s Opp.”).) Defendant filed its reply on
May 18, 2016. (See Def.'s Reply, ECF No. 46.)
Defendant also filed a supplemental memorandum in support of
its motion to dismiss on July 10, 2016, and plaintiff filed
its response on July 12, 2016. This Court held a hearing on
July 20, 2016.

For the
reasons stated below, defendant's motion to dismiss
Watkins' amended complaint is granted in part and denied
in part.

FACTUAL
ALLEGATIONS

According
to Watkins, McCormick has been the dominant wholesaler of
black pepper for decades and is now responsible for
approximately 70% of domestic black pepper sales. (Am. Compl.
¶¶ 7-14.) It sells its pepper in distinctively
branded red and white metal containers in three sizes: small
(full capacity of two ounces of pepper), medium (full
capacity of four ounces of pepper), and large (full capacity
of eight ounces of pepper). (Id. ¶ 11.) In
addition, McCormick sells black peppercorn grinders,
which-until recently-contained 1.24 ounces of whole black
peppercorns. (Id. ¶¶ 14, 28.) Watkins
claims that other pepper manufacturers often model their tins
on McCormick's, and pepper manufacturers use the
packaging, appearance, size, and shape of their tins to
advertise their products. (Id. ¶ 12.) Consumers
cannot see the amount of pepper inside McCormick's
containers because the tins are not transparent and the
grinders are covered on the top and sides by a plastic seal
and product label. (Id. ¶¶ 16, 28.)

Plaintiff
alleges that, in early 2015, McCormick reduced the amount of
actual pepper in each of its pepper tins by 25% but
“misleadingly continued to use the same
traditional-sized tins” and reduced the quantity of
peppercorns in its grinders from 1.24 ounces to 1 ounces,
again without changing the size of the containers.
(Id. ¶¶ 15, 28.) The photographs included
with plaintiff's complaint show that McCormick did print
the reduced quantity on the containers, even though the size
of the containers did not change. (See Id. at 7-9
(Photos A, B, and C).) Plaintiff alleges on information and
belief that McCormick “maintained the price” of
each tin size, although plaintiff does not specify whether
“price” refers to the wholesale or retail price.
(Id. ¶ 21.) According to plaintiff, this
reduction in the product within McCormick's well-known
and recognizable containers amounts to what regulators have
termed “nonfunctional slack-fill.” (Pl.'s
Opp. at 2 (citing 21 C.F.R. § 100.100 (“A
container that does not allow the consumer to fully view its
contents shall be considered to be filled as to be misleading
if it contains nonfunctional slack-fill. Slack-fill is the
difference between the actual capacity of a container and the
volume of product contained therein.”)).)

Because
McCormick's consumers had become accustomed to the size
of McCormick's containers (and those of its competitors)
and relied on them to advertise the amount of pepper being
sold, plaintiff alleges that the reduction in pepper quantity
and resulting slack-fill has “led to widespread
confusion and deception of the consuming public.” (Am.
Compl. ¶¶ 13, 26, 50-55.)[2] Watkins claims that
McCormick's decision to change the amount of pepper sold
without changing the size of the tins or their price amounted
to a willful attempt to mislead consumers. (Id.
¶ 71.)

Finally,
Watkins alleges that McCormick's practice of
slack-filling is disadvantaging Watkins' sales. As
plaintiff explains, “[w]hen McCormick's
slack-filled tins and grinders are positioned on a grocery
store shelf next to competitors, including Watkins, McCormick
tried to induce consumers to buy McCormick pepper because it
appears - falsely - that the McCormick container is
equivalent to, or larger than, the Watkins containers and
those of other competitors.” (Id. ¶ 37.)
Watkins claims that if consumers had actually known that
McCormick's various tins contained 25% less pepper than
usual, they would have bought pepper produced by
McCormick's competitors, including Watkins.

ANALYSIS

McCormick
argues that this Court should dismiss all five counts of
Watkins' amended complaint. First, it challenges
Watkins' standing to bring a claim for injuries which
McCormick believes to be speculative. Second, it maintains
that Watkins has not alleged all elements of a Lanham Act
claim. Third, it argues that Watkins' state statutory
claims should be dismissed for failure to state a claim or on
the basis of choice-of-law analysis. And finally, McCormick
maintains that, under Minnesota law, unfair competition is
not an independently existing tort. The Court considers each
of these arguments seriatim.

I.
ARTICLE III STANDING

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&ldquo;To
survive a motion to dismiss for lack of [constitutional]
standing, a complaint must state a plausible claim that the
plaintiff has suffered an injury in fact fairly traceable to
the actions of the defendant that is likely to be redressed
by a favorable decision on the merits.&rdquo; Humane
Soc&#39;y of the U.S. v. Vilsack, 797 F.3d 4, 8 (D.C.
Cir. 2015) (citing Lujan v. Defenders of Wildlife,
504 U.S. 555, 560-61 (1992)). On such a motion to dismiss,
the Court &ldquo;must accept as true all material allegations
of the complaint, and must construe the complaint in favor of
the complaining party.&rdquo; Warth v. Seldin, 422
U.S. 490, 501 (1975). The Court must “‘presum[e]
that general allegations embrace those specific facts that
are necessary to support [a contested] claim, '”
and thus “general factual allegations of injury
...

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.